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Abstract

When the European Investment Bank issued the first green bond in 2007, few imagined this debt instrument would attract mainstream investors. Designed to finance projects ranging from climate change prevention to clean transportation development, green bonds were geared for socially responsible investors concerned with our planet’s sustainability. However, by 2015, green bonds were issued by major corporations like Apple and municipalities like New York City at a record $40 billion. Major players on Wall Street have taken notice and look to cash in on the rapidly growing green bond market. With this new influx of investment and the bonds’ tax-exempt status, clear standards for what constitutes a “green” project are required to ensure investors’ money is actually being used to increase environmental protection and sustainable development. This Comment discusses how green bonds were first created, their original purposes, and how they grew into a mainstream investment tool. Since the demand for these bonds exploded, there remains very few regulations ensuring these investments will be used for “green” projects. The Securities and Exchange Commission (“SEC”), Environmental Protection Agency (“EPA”), and the Municipal Securities Rulemaking Board (“MSRB”) are best suited to provide clear definitions and disclosure laws for green bond projects, giving issuers clarity, and ensuring investors that their funds are being properly used for environmental and sustainable development.